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These 10 Automakers Will Be Hit Hardest By Tariffs, With Price Hikes Likely

Key Takeaways

  • Analysts expect U.S. car prices to rise by $3,000 due to tariffs on Mexico and Canada.
  • GM, Ford, and Volkswagen Group are among the automakers hardest hit.
  • New car prices are already near all-time highs, with tariffs expected to send prices to new highs in 2025.

The cost of buying a new car could soon get even higher. With tariffs on Canadian and Mexican auto imports set to take effect next month, new car prices in the U.S. are set to rise to new records. Here’s a look at how automotive industry analysts expect President Trump’s tariffs to impact U.S. car prices in 2025.

Tariffs on Canada and Mexico Delayed For Now

The Ford Mustang Mach-E is built in Mexico.

In February 2025, President Donald Trump announced a 25% tariff on vehicle imports and parts from Canada and Mexico, along with a new 10% duty on imports from China, effective February 4. However, following negotiations with Canadian and Mexican leaders, an agreement was reached to delay the tariffs on Canada and Mexico for one month.

The Trump administration says that the latest tariffs are aimed at stopping the flow of fentanyl and immigration from Canada and Mexico into the U.S. However, the policy also threatens to disrupt a deeply integrated auto industry where around 90% of auto exports from both Mexico and Canada go to the U.S.

Flavio Volpe, president of Canada’s Automotive Parts Manufacturers’ Association, warns that the tariffs could bring auto production to a standstill: “At 25%, absolutely nobody in our business is profitable by a long shot.” With automotive supply chains threatened, U.S. automakers just across the border could be severely impacted as soon as this month. 

How Will Tariffs Affect Car Prices in 2025?

If fully enacted, the tariffs will add an estimated $60 billion in costs to the auto industry, according to AlixPartners research. Much of that cost is expected to be passed on to consumers. With the average new car price already hovering near record highs, an extra $3,000 per vehicle could push some buyers out of the market entirely. In February 2025, the average new car price sits at $49,740. With the added costs of tariffs, new car prices are on track to surpass $50,000 for the first time. 

For automakers, higher costs will likely result in production slowdowns and job losses. Manufacturing hubs in Detroit, Ontario, and across Mexico could see thousands of layoffs as companies struggle to absorb the added costs.

Automakers Hit Hardest by Tariffs

Tariffs impacts on car prices in 2025

If tariffs are fully enacted against imports from both Mexico and Canada, Automotive News reports that several automakers with plants in Mexico and Canada will be affected, including:

Audi: Volkswagen Group’s Audi plant in Mexico builds the Audi Q5. The factory produced nearly 176,000 cars in 2023, many of which were exported to the United States. 

BMW: The BMW plant in San Luis Potosi, Mexico produces the 3 Series, 2 Series Coupe, and M2, with nearly all output going to the U.S. 

Ford: With three plants in Mexico, Ford exported nearly 196,000 vehicles to the U.S. and Canada in the first half of 2024 alone, with 90% of those going to the U.S. Ford also has a plant in Oakville, Canada.

General Motors: GM imported roughly 750,000 vehicles from Canada and Mexico in 2024, including key models like the Chevy Silverado, GMC Sierra, and electric versions of the Equinox and Blazer.

Honda: 80% of Honda’s Mexican-made vehicles are exported to the U.S. and has warned that continued tariffs may force a production shift.

Kia: Under the Hyundai Motor Group umbrella, Kia operates a Mexican factory producing its own vehicles and some Hyundai Santa Fe SUVs.

Mazda: In 2023, Mazda exported around 120,000 vehicles from Mexico to the U.S. Mazda has suggested that it may reconsider future investments due to U.S. tariffs.

Nissan: Nissan manufactures the Sentra, Versa, and Kicks in Mexico, with nearly 505,000 vehicles built in the first nine months of 2024.

Stellantis: FCA (now under Stellantis) operates assembly plants in Saltillo, Mexico (Ram pickups and vans) and Toluca, Mexico (Jeep Compass). Stellantis also has plants in Ontario, Canada.

Toyota: In 2025, Toyota builds its Tacoma pickup truck exclusively in Mexico, selling more than 230,000 units in the U.S. in 2023.

Volkswagen: VW Group operates a large factory in Puebla, Mexico where it produces the Jetta, Tiguan, and Taos for U.S. export. In Canada, VW is investing $4.9 billion to build a battery factory in St. Thomas, Ontario, set to start production in 2027.

What Tariffs Means for Car Buyers

With new vehicle prices already at historic highs, adding another $3,000 to the price tag could drive even more consumers toward used cars or force them to hold onto their vehicles longer. Dealers may also see a slowdown in sales as affordability becomes a growing concern.

CarEdge’s Take: If you’re considering buying a car in 2025, it’s worth watching how these tariffs play out. If prices rise sharply, buyers may want to consider negotiating harder on new cars, exploring certified pre-owned options, or waiting for potential policy changes.

A Blow to the Auto Industry

The auto industry is one of the most interconnected sectors in North America. Car parts often cross borders multiple times before a final vehicle reaches the consumer. The new tariffs disrupt decades of trade agreements and could lead to long-term shifts in where vehicles are built.

While some automakers, like BMW, have committed to continuing investment in Mexican production, others are scrambling to adjust supply chains and reevaluate their manufacturing strategies.

Trump has suggested that the tariffs will push automakers to bring production back to the U.S., but industry experts argue that shifting manufacturing isn’t so simple. Building new plants and establishing new supply lines takes years, and in the meantime, consumers are the ones who will feel the pinch.

General Motors, Ford, and other automakers have already stated that they won’t move production unless they see clear long-term economic benefits. Instead, they are focused on mitigating the immediate impact of tariffs through supply chain adjustments and pricing strategies.

The Bottom Line for Car Shoppers

Tariffs on Canadian and Mexican auto imports could lead to even higher car prices in 2025, at a time when new car prices are already back near all-time highs. If you’re in the market for a new car, staying informed and being strategic about when and how you buy could save you thousands.

CarEdge will continue to track these developments and provide insights on how they affect car prices, financing, and buying strategies. For the latest updates and money-saving tips, check out our free car buying tools and expert analysis.

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Last updated Feb 4, 2025

1 Comment

  1. Ross

    How do you think this could affect the leasing market? We’re back and forth right now on purchasing a used car vs leasing a new car

    Reply

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